P.E.I. government projects $94.8M deficit, thanks to inflation and Fiona | CBC News
Despite considerable bounce-back in some major business sectors on P.E.I. in 2022, the provincial government is projecting it will run a deficit of $94.8 million by the end of the current fiscal year.
That’s according to the province’s fiscal update, released on Thursday.
The new figure represents a $1.9-million increase in the deficit, which was originally projected at $92.9 million in the 2022-2023 Operating Budget released in February.
Among the reasons for the projected deficit are inflation, which has wreaked havoc on P.E.I.’s economy for months, and dramatic spending after post-tropical storm Fiona swept over the province in September.
The province said other larger expenses are related to COVID-19 and the agriculture sector — the latter of which was upended by the discovery of potato wart in samples from two Island fields in fall 2021.
“The effects of inflation, as well as recovery efforts following Hurricane Fiona, have had a significant impact on the lives of Islanders,” the fiscal update document said.
“The forecasted increase to the 2022-2023 deficit also reflects continued transitional support for COVID-19 as well as programming for the agricultural sector, which continues to be affected by export barriers for seed potatoes due to potato wart.”
This fall, the P.E.I. government announced a $58-million relief package, the largest financial relief package in the province’s history, following Fiona. In the fiscal update this week, the province said there’s a total $89.2 million for inflation support programs and $81.5 million in costs related to Fiona response and recovery.
A spokesperson for the province confirmed the $58 million is factored into the expenditure forecast released Thursday.
Most departments see higher spending
Spending across government departments is up almost universally, with a few exceptions. The biggest amounts listed were:
- $39.1 million more for Social Development and Housing;
- $34.3 million for Environment, Energy and Climate Action;
- $28.8 million for Justice and Public Safety;
- $17.3 million for Health and Wellness; and
- $17.2 million for Transportation and Infrastructure.
The province is also expecting larger total revenues this fiscal year as inflation continues to set records and the population grows.
“This increase is driven primarily from an increase in forecasted sales tax, as well as personal and corporate income taxes due to a stronger than anticipated economic recovery,” the fiscal update said.
Drivers of that revenue jump were listed as the province’s continuing transition out of COVID-19 public health measures, “high inflation’s continued persistence, [and] a larger than expected increase in the population and more residents earning more than $60,000 annually.”
On Wednesday, Statistics Canada released updated population data that showed Prince Edward Island had 172,707 residents as of Oct. 1, a boost of 1.2 per cent from the previous quarter.